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Electronically  Recorded 

Official  Public  Records 

IX  -  PAID  UP  

NOTICE  OF  CONFIDENTIALIT^5«IOIiTSiidHfs4rOU  ARE  A  NATURAL  PERSON,  YOU  MAY  REMOVE  OR 
STRIKE  ANY  OF  THE  FOLLOWING  INFORMATION  FROM  THIS  INSTRUMENT  BEFORE  IT  IS  FILED  FOR 
RECORD  IN  THE  PUBLIC  RECORDS:  YOUR  SOCIAL  SECURITY  NUMBER  OR  YOUR  DRIVER'S  LICENSE 
NUMBER. 

NO  SURFACE  USE 
PAID  UP  OIL  AND  GAS  LEASE 

^THIS  LEASE  AGREEMENT  (this  "Lease")  is  made  as  of  the&$_  day  ofZ^&r&rfi&je-  .  2008,  between  the 
Kmm.  K  Car  raw  ay,  Individually,  and  as  Independent  Executrix  of  the  Estate  of  Robert  H  Carraway,  Jr  ,  whose 
address  is  1600  Texas  St,  Apt  2504,  Fort  Worth,  TX  76102,  as  Lessor,  and  XTO  Energy  Inc.,  whose  address  is  810 
Houston  Street,  Fort  Worth,  Texas  76102,  as  Lessee. 

1.  Leased  Premises.  In  consideration  of  a  cash  bonus  paid  upon  execution  of  this  Lease,  and  the  covenants  herein 
contained,  Lessor  hereby  grants,  leases  and  lets  exclusively  to  Lessee  the  land  described  on  Exhibit  "A"  attached  hereto  (the 
"leased  premises")  in  Tarrant  County,  Texas  (including  any  interests  therein  which  Lessor  may  hereafter  acquire  by 
reversion,  prescription  or  otherwise),  for  the  purpose  of  exploring  for,  developing,  producing  and  marketing  oil  and  gas.  For 
purposes  of  this  Lease,  "oil  and  gas"  means  oil,  gas  and  other  liquid  and  gaseous  hydrocarbons  and  their  constituent  elements 
produced  through  a  well  bore.  "Oil"  includes  all  condensate,  distillate  and  other  liquid  and  gaseous  hydrocarbons  produced 
through  a  well  bore.  "Gas"  includes  helium,  carbon  dioxide  and  other  commercial  gases,  as  well  as  hydrocarbon  gases. 
Expressly  excluded  from  this  Lease  are  lignite,  coal,  sulfur  and  other  like  minerals.  The  leased  premises  shall  include  all 
strips  and  gores,  streets,  easements,  highways  and  alleyways  adjacent  thereto.  Lessor  agrees  to  execute  at  Lessee's  request 
any  additional  or  supplemental  instruments  reasonably  necessary  for  a  more  complete  or  accurate  description  of  the  leased 
premises.  In  the  event  Lessor  owns  any  additional  acreage  than  that  for  which  bonus  was  originally  paid,  Lessee  shall  pay 
additional  bonus  at  the  rate  per  acre  on  which  bonus  was  originally  paid  when  this  Lease  was  acquired.  For  the  purpose  of 
determining  the  amount  of  any  shut-in  royalties  hereunder,  the  number  of  gross  acres  specified  on  Exhibit  "A"  shall  be 
deemed  correct,  whether  actually  more  or  less. 

2.  Term.  This  Lease  is  a  "paid  up"  lease  requiring  no  rentals.  Subject  to  the  other  provisions  contained  herein,  this 
Lease  shall  be  for  a  term  of  three  (3)  years  from  the  date  hereof  (the  "primary  term"),  and  for  as  long  thereafter  as  oil  or  gas 
or  other  substances  covered  hereby  are  produced  in  paying  quantities  from  the  leased  premises  or  from  lands  pooled 
therewith,  or  this  Lease  is  otherwise  maintained  in  effect  pursuant  to  the  provisions  hereof. 

3.  Royalty.  Royalties  on  oil,  gas  and  other  substances  produced  and  saved  hereunder  shall  be  paid  by  Lessee  to 
Lessor  as  follows:  (a)  for  oil  and  other  liquid  hydrocarbons  separated  at  Lessee's  separator  facilities,  the  royalty  shall  be 
twenty  five  percent  (25%)  of  such  production,  to  be  delivered  at  Lessee's  option  to  Lessor  at  the  wellhead  or  to  Lessor's 
credit  at  the  oil  purchaser's  transportation  facilities,  provided  that  Lessee  shall  have  the  continuing  right  to  purchase  such 
production  at  the  wellhead  market  price  then  prevailing  in  the  same  field  (or  if  there  is  no  such  price  then  prevailing  in  the 
same  field,  then  in  the  nearest  field  in  which  there  is  such  a  prevailing  price)  for  production  of  similar  grade  and  gravity;  and 
(b)  for  gas  (including  casinghead  gas)  and  all  other  substances  covered  hereby,  the  royalty  shall  be  twenty  five  percent  (25%) 
of  the  proceeds  realized  by  Lessee  from  the  sale  thereof,  computed  at  the  point  of  sale,  less  a  proportionate  part  of  ad  valorem 
taxes  and  production,  severance  or  other  excise  taxes,  and  less  the  permitted  unaffiliated  third  party  deductions  authorized 
below;  provided  that  Lessee  shall  have  the  continuing  right  to  purchase  such  production  at  the  prevailing  wellhead  market 
price  paid  for  production  of  similar  quality  in  the  same  field  (or  if  there  is  no  such  price  then  prevailing  in  the  same  field, 
then  in  the  nearest  field  in  which  there  is  such  a  prevailing  price)  pursuant  to  comparable  purchase  contracts  entered  into  on 
the  same  or  nearest  preceding  date  as  the  date  on  which  Lessee  commences  its  purchases  hereunder.  If  at  the  end  of  the 
primary  term  or  any  time  thereafter  one  or  more  wells  on  the  leased  premises  or  lands  pooled  therewith  are  capable  of 
producing  oil  or  gas  or  other  substances  covered  hereby  in  paying  quantities,  but  such  well  or  wells  are  either  shut-in  or 
production  therefrom  is  not  being  sold  by  Lessee,  such  well  or  wells  shall  nevertheless  be  deemed  to  be  producing  in  paying 
quantities  for  the  purpose  of  maintaining  this  Lease.  A  well  that  has  been  drilled  but  not  traced  shall  be  deemed  capable  of 
producing  in  paying  quantities.  If  for  a  period  of  ninety  (90)  consecutive  days  such  well  or  wells  are  shut-in  or  production 
therefrom  is  not  being  sold  by  Lessee,  then  Lessee  shall  pay  shut-in  royalty  of  seventy-five  dollars  ($75.00)  per  acre  then 
covered  by  this  Lease  on  or  before  the  end  of  said  90-day  period  and  thereafter  on  or  before  each  anniversary  of  the  end  of 
said  90-day  period  while  the  well  or  wells  are  shut-in  or  production  therefrom  is  not  being  sold  by  Lessee;  provided, 
however,  that  if  this  Lease  is  otherwise  being  maintained  by  operations,  or  if  production  is  being  sold  by  Lessee  from  another 
well  or  wells  on  the  leased  premises  or  lands  pooled  therewith,  no  shut-in  royalty  shall  be  due  until  the  end  of  the  90-day 
period  next  following  cessation  of  such  operations  or  production.  Notwithstanding  anything  to  the  contrary  herein,  it  is 
expressly  understood  and  agreed  that  after  the  expiration  of  the  primary  term,  Lessee  shall  not  have  the  right  to  continue  this 
Lease  in  force  by  payment  of  shut-in  royalty  for  more  than  a  single  period  of  up  to  two  (2)  consecutive  years. 

Royalties  on  oil,  gas  and  other  substances  produced  and  saved  hereunder  which  are  processed  in  a  processing  plant 
in  which  Lessee,  or  an  affiliate  of  Lessee,  has  a  direct  or  indirect  interest,  shall  be  calculated  based  upon  die  higher  of  the 
proceeds  received  or  the  market  value  of  the  products  so  processed.  Similarly,  on  oil,  gas  and  other  substances  produced  and 
saved  hereunder  which  are  sold  to  Lessee,  or  an  affiliate  of  Lessee,  royalties  shall  be  paid  based  upon  the  higher  of  the 
market  value  of  the  products  so  sold  and  the  proceeds  received  by  Lessee  for  said  products.  Notwithstanding  anything  to  the 
contrary  herein,  except  for  nonaffiliated  third-party  charges  incurred  or  paid  by  Lessee  to  transport,  gather,  compress, 
stabilize,  process  or  treat  gas  produced  from  the  leased  premises,  or  lands  pooled  therewith  (including  fuel  charges),  in  no 
event  shall  any  of  Lessor's  royalty  bear  any  part  of  the  costs  of  production  or  any  post-production  costs,  including  costs  of 
lifting,  gathering,  dehydration,  compression,  separation,  delivery,  transportation,  manufacture,  processing,  treating  or 
marketing,  or  for  construction,  operation  or  depreciation  of  any  plant  or  other  facility  or  equipment  for  processing  or  treating 
oil  or  gas  produced  from  the  leased  premises  or  lands  pooled  therewith.  In  no  event  shall  Lessor  receive  a  price  greater  than 
or  less  than  Lessee  in  sales  to  nonaffiliates. 


Tarrant  County  Texas 

2008  Oct  30  04:25  PM  D208411388 

Fee:  $  36.00 
Submitter:  SIMPLIFILE  6  Pages 


£s  used  herein,  "affiliate"  means  (i)  a  corporation,  joint  venture,  partnership  or  other  entity  that  owns  more  than 
ten-percent  (10%)  of  the  outstanding  voting  interest  of  Lessee  or  in  which  Lessee  owns  more  than  ten  percent  (10%)  of  the 
outstanding  voting  interest;  or  (ii)  a  corporation,  joint  venture,  partnership  or  other  entity  in  which,  together  with  Lessee, 
more  than  ten  percent  (10%)  of  the  outstanding  voting  interest  of  both  the  Lessee  and  the  other  corporation,  joint  venture' 
partnership  or  other  entity  is  owned  or  controlled  by  the  same  person  or  group  of  persons. 

4.  Payments.  All  shut-in  or  other  royalty  payments  under  this  Lease  shall  be  paid  or  tendered  to  Lessor  at  the  above 
address,  or  at  such  address  or  to  Lessor's  credit  at  such  depository  institution  as  Lessor  may  provide  written  notice  of  from 
time  to  time.  All  payments  or  tenders  may  be  made  in  currency,  by  check  or  by  draft.  Unless  there  is  a  reasonable  title 
dispute  or  question  as  to  title,  Lessee  must  disburse  or  cause  to  be  disbursed  to  Lessor  its  royalty  on  production  from  a 
particular  well  not  later  than  one  hundred  twenty  (120)  days  after  the  end  of  the  month  of  first  sales  of  production. 
Thereafter,  Lessee  must  disburse  or  caused  to  be  disbursed  to  Lessor  its  royalty  on  production  by  the  last  day  of  the  second 
month  after  the  month  in  which  production  is  sold.  If  not  paid  when  due,  Lessor's  royalty  will  bear  interest  at  the  statutory 
rate  from  due  date  until  paid,  which  amount  Lessee  agrees  to  pay. 

5  Continuous  Drilling  Obligations.  If  Lessee  drills  a  well  which  is  incapable  of  producing  in  paying  quantities  (a 
"dry  hole")  on  the  leased  premises  or  lands  pooled  therewith,  or  if  all  production  (whether  or  not  in  paying  quantities) 
permanently  ceases  from  any  cause,  including  a  revision  of  unit  boundaries  pursuant  to  the  provisions  of  Section  6  or  the 
action  of  any  governmental  authority,  then  in  the  event  this  Lease  is  not  otherwise  being  maintained  in  force  it  shall 
nevertheless  remain  in  force  if  Lessee  commences  operations  for  reworking  an  existing  well  or  for  drilling  an  additional  well 
or  for  otherwise  obtaining  or  restoring  production  on  the  leased  premises  or  lands  pooled  therewith  within  ninety  (90)  days 
after  completion  of  operations  on  such  dry  hole  or  within  ninety  (90)  days  after  such  cessation  of  all  production.  If  at  the  end 
of  the  primary  term,  or  at  any  time  thereafter,  this  Lease  is  not  otherwise  being  maintained  in  force  but  Lessee  is  then 
engaged  in  drilling,  reworking  or  any  other  operations  reasonably  calculated  to  obtain  or  restore  production  therefrom,  this 
Lease  shall  remain  in  force  so  long  as  any  one  or  more  of  such  operations  are  prosecuted  with  no  cessation  of  more  than 
ninety  (90)  consecutive  days,  and  if  any  such  operations  result  in  the  production  of  oil  or  gas  or  other  substances  covered 
hereby,  as  long  thereafter  as  there  is  production  in  paying  quantities  from  the  leased  premises  or  lands  pooled  therewith. 
After  completion  of  a  well  capable  of  producing  in  paying  quantities  hereunder,  Lessee  shall  drill  such  additional  wells  on  the 
leased  premises  or  lands  pooled  therewith  as  a  reasonably  prudent  operator  would  drill  under  the  same  or  similar 
circumstances  (a)  to  develop  the  leased  premises  as  to  formations  then  capable  of  producing  in  paying  quantities  on  the 
leased  premises  or  lands  pooled  therewith,  or  (b)  to  protect  the  leased  premises  from  uncompensated  drainage  by  any  well  or 
wells  located  on  other  lands  not  pooled  therewith.  There  shall  be  no  covenant  to  drill  exploratory  wells  or  any  additional 
wells  except  as  expressly  provided  herein. 

6.  Pooling.  Lessee  shall  have  the  right  but  not  the  obligation  to  pool  all  or  any  part  of  the  leased  premises  or  interests 
• ?eUL^5:  any  0ther  or  mterests'  as  to  any  or  all  depths  or  zones,  and  as  to  any  or  all  substances  covered  by  this  lease 
either  before  or  after  the  commencement  of  production,  whenever  Lessee  deems  it  necessary  or  proper  to  do  so  in  order  to 
prudently  develop  or  operate  the  leased  premises,  whether  or  not  similar  pooling  authority  exists  with  respect  to  such  other 
lands  or  interests;  provided,  however,  that  the  entire  leased  premises  covered  by  this  Lease  shall  be  included  in  any  unit 
created  pursuant  to  the  pooling  authority  granted  herein.  The  unit  formed  by  such  pooling  for  an  oil  well  which  is  not  a 
horizontal  completion  shall  not  exceed  eighty  (80)  acres  phis  a  maximum  acreage  tolerance  often  percent  (10%)  and  for  a 

welI.°^  horizontai  completion  shall  not  exceed  six  hundred  forty  (640)  acres  plus  a  maximum  acreage  tolerance  often 
percent  (10%);  provided  that  a  larger  unit  may  be  formed  for  an  oil  well  or  gas  well  or  horizontal  completion  to  conform  to 
any  well  spacing  or  density  pattern  that  may  be  prescribed  or  permitted  by  any  governmental  authority  having  jurisdiction  to 
do  so.  For  the  purpose  of  the  foregoing,  the  terms  "oil  well"  and  "gas  weir  shall  have  the  meanings  prescribed  by  applicable 
law  or  the  appropriate  governmental  authority,  or,  if  no  definition  is  so  prescribed,  "oil  well"  means  a  well  with  an  initial  gas- 
ml  ratio  of  less  than  100,000  cubic  feet  per  barrel  and  "gas  well"  means  a  well  with  an  initial  gas-oil  ratio  of  100  000  cubic 
feet  or  more  per  barrel,  based  on  24-hour  production  test  conducted  under  normal  producing  conditions  using  standard  lease 
separator  fecilities  or  equivalent  testing  equipment;  and  "horizontal  completion"  means  a  well  in  which  the  horizontal 
component  of  the  gross  completion  interval  in  the  reservoir  exceeds  the  vertical  component  thereof.  In  exercising  its  pooling 
rights  hereunder,  within  ninety  (90)  days  of  first  production,  Lessee  shall  file  of  record  a  written  declaration  describing  the 
unit  and  stating  the  effective  date  of  pooling  which  may  be  retroactive  to  first  production.  In  the  event  Lessor's  acreage  is 
included  in  a  well,  all  of  Lessor's  acreage  shall  be  included.  Production,  drilling  or  reworking  operations  anywhere  on  a  unit 
which  includes  the  leased  premises  shall  be  treated  as  if  it  were  production,  drilling  or  reworking  operations  on  the  leased 
premises,  except  that  the  production  on  which  Lessor's  royalty  is  calculated  shall  be  that  proportion  of  the  total  unit 
production  which  the  net  acreage  covered  by  this  Lease  and  included  in  the  unit  bears  to  the  total  gross  acreage  in  the  unit 
Pooling  in  one  or  more  instances  shall  not  exhaust  Lessee's  pooling  rights  hereunder,  and  Lessee  shall  have  the  recurring 
right  but  not  the  obligation  to  revise  any  unit  formed  hereunder  by  expansion  or  contraction  or  both,  either  before  or  after 
commencement  of  production,  m  order  to  conform  to  the  well  spacing  or  density  pattern  prescribed  or  permitted  by  the 
governmental  authority  having  jurisdiction,  or  to  conform  to  any  productive  acreage  determination  made  by  such 
governmental  authority.  In  making  such  a  revision,  Lessee  shall  file  of  record  a  written  declaration  describing  the  revised 
unit  and  stating  the  effective  date  of  revision.  If  the  leased  premises  are  included  in  or  excluded  from  the  unit  by  virtue  of 
such  revision,  the  proportion  of  unit  production  on  which  royalties  are  payable  hereunder  shall  thereafter  be  adjusted 
accordmgly.  In  the  absence  of  production  in  paying  quantities  from  a  unit,  or  upon  permanent  cessation  thereof,  Lessee  may 
terminate  the  unit  by  filing  of  record  a  written  declaration  describing  the  unit  and  stating  the  date  of  termination  Pooling 
hereunder  shall  not  constitute  a  cross-conveyance  of  interests.  If  this  lease  now  or  hereafter  covers  separate  tracts  no  pooling 
or  unitization  of  royalty  interest  as  between  any  such  separate  tracts  is  intended  or  shall  be  implied  or  result  merely  from  the 
inclusion  of  such  separate  tracts  within  this  Lease  but  Lessee  shall  nevertheless  have  the  right  to  pool  as  provided  above  with 
consequent  allocation  of  production  as  above  provided.  As  used  in  this  paragraph,  the  words  "separate  tract"  mean  any  tract 
with  royalty  ownership  differing,  now  or  hereafter,  either  as  to  parties  or  amounts,  from  that  as  to  any  other  part  of  the  leased 
premises.  K 

7.  Partial  Interests.  If  Lessor  owns  less  than  the  foil  mineral  estate  in  all  or  any  part  of  the  leased  premises  the 
royalties  and  shut-in  royalties  payable  hereunder  for  any  well  on  any  part  of  the  leased  premises  or  lands  pooled  therewith 


shall  be  reduced  to  the  proportion  that  Lessor's  interest  in  such  part  of  the  leased  premises  bears  to  the  full  mineral  estate  in 
such  part  of  the  leased  premises. 

8.  Assignment.  The  interest  of  either  Lessor  or  Lessee  hereunder  may  be  assigned,  devised  or  otherwise  transferred 
in  whole  or  in  part,  by  area  and/or  by  depth  or  zone,  and  the  rights  and  obligations  of  the  parties  hereunder  shall  extend  to 
their  respective  heirs,  devisees,  executors,  administrators,  successors  and  assigns;  provided,  however,  if  Lessee  assign's  any 
part  of  this  Lease,  the  Assignee  shall  give  written  notice  to  Lessor  within  thirty  (30)  days  after  the  assignment  is  recorded  in 
the  county  records.  No  change  in  Lessor's  ownership  shall  have  the  effect  of  reducing  the  rights  or  enlarging  the  obligations 
of  Lessee  hereunder,  and  no  change  in  ownership  shall  be  binding  on  Lessee  until  thirty  (30)  days  after  Lessee  has  been 
furnished  the  original  or  certified  or  duly  authenticated  copies  of  the  documents  establishing  such  change  of  ownership  to  the 
reasonable  satisfaction  of  Lessee  or  until  Lessor  has  satisfied  the  notification  requirements  contained  in  Lessee's  usual  form 
of  division  order.  Except  as  otherwise  stated  herein,  if  Lessee  transfers  its  interest  hereunder  in  whole  or  in  part,  Lessee  shall 
be  relieved  of  all  obligations  thereafter  arising  with  respect  to  the  transferred  interest,  and  failure  of  the  transferee  to  satisfy 
such  obligations  with  respect  to  the  transferred  interest  shall  not  affect  the  rights  of  Lessee  with  respect  to  any  interest  not  so 
transferred.  If  Lessee  transfers  a  full  or  undivided  interest  in  all  or  any  portion  of  the  area  covered  by  this  Lease,  the 
obligation  to  pay  or  tender  shut-in  royalties  hereunder  shall  be  divided  between  Lessee  and  the  transferee  in  proportion  to  the 
net  acreage  interest  in  this  Lease  then  held  by  each. 

9.  Release  and  Vertical  Pugh  Clause.  Lessee  may,  at  any  time  and  from  time  to  time,  deliver  to  Lessor  in  recordable 
form  or  file  of  record  a  written  release  of  this  Lease  as  to  a  full  or  undivided  interest  in  all  or  any  portion  of  the  area  covered 
by  this  Lease  or  any  depths  or  zones  thereunder,  and  shall  thereupon  be  relieved  of  all  obligations  thereafter  arising  with 
respect  to  the  interest  so  released.  If  Lessee  releases  all  or  an  undivided  interest  in  less  than  all  of  the  area  covered  hereby, 
Lessee's  obligation  to  pay  or  tender  shut-in  royalties  shall  be  proportionately  reduced  in  accordance  with  the  net  acreage 
interest  retained  hereunder.  In  any  event,  upon  termination  of  this  Lease,  Lessee,  its  successors  or  assigns,  shall  deliver  to 
Lessor  a  recordable  release  as  to  such  portion  or  portions  of  this  Lease  which  have  terminated  under  the  terms  of  this  Lease. 
Upon  the  expiration  of  the  primary  term  of  this  Lease,  upon  the  expiration  of  any  extension  or  renewal  of  the  primary  term, 
or  after  cessation  of  operations  as  provided  herein,  whichever  occurs  last,  this  Lease  shall  terminate  as  to  all  rights  lying 
below  one  hundred  feet  (100')  below  either  (1)  the  deepest  depth  drilled  in  any  well  drilled  on  the  leased  premises  or  on  lands 
pooled  therewith  or  (2)  the  stratigraphic  equivalent  of  the  base  of  the  deepest  formation  producing  or  capable  of  producing  in 
any  well  drilled  on  the  leased  premises  or  on  lands  pooled  therewith,  whichever  is  the  deepest;  provided,  however,  if  Lessee 
is  then  engaged  in  operations  on  the  leased  premises  or  on  lands  pooled  therewith,  this  Lease  shall  remain  in  mil  force  and 
effect  as  to  all  depths  so  long  as  no  more  man  ninety  (90)  days  elapse  between  operations. 

10.  Waiver  of  Surface  Use.  Notwithstanding  anything  to  the  contrary  in  this  Lease,  Lessee  shall  not  enter  upon  the 
surface  of,  cross  over,  place  any  structure  or  building  upon  or  conduct  any  operations  (excluding  geophysical/seismic 
operations)  on  the  leased  premises  or  within  six  hundred  feet  (600')  of  the  leased  premises.  Lessee  shall  only  develop  the 
leased  premises  by  pooling,  as  provided  herein,  or  by  directional  or  horizontal  drilling  commenced  from  a  surface  location  on 
other  lands.  Lessee  shall  make  all  reasonable  efforts  not  to  use  residential  or  neighborhood  streets  or  thoroughfares  in 
developing  the  leased  premises,  any  lands  pooled  therewith  or  otherwise. 

1 1 .  Noise.  Noise  levels  associated  with  Lessee's  operations  related  to  the  drilling,  completion  and  reworking  of  wells 
shall  be  kept  to  a  reasonable  minimum,  taking  into  consideration  reasonably  available  equipment  and  technology  in  the  oil 
and  gas  industry,  the  level  and  nature  of  development  and  surface  use  elsewhere  in  the  vicinity  of  Lessee's  drill  sites  and  the 
fact  Lessee's  operations  are  being  conducted  in  or  near  an  urban  residential  area.  If  Lessee  utilizes  any  non-electric-powered 
equipment  in  its  operations,  Lessee  shall  take  reasonable  steps  to  muffle  the  sound  therefrom  by  installing  a  noise 
suppression  muffler  or  like  equipment. 

12.  Regulatory  Requirements  and  Force  Majeure.  Lessee's  obligations  under  this  Lease,  whether  express  or  implied 
shall  be  subject  to  all  applicable  laws,  rules,  regulations  and  orders  of  any  governmental  authority  having  jurisdiction, 
including  environmental  regulations,  setback  requirements,  restrictions  on  the  drilling  and  production  of  wells,  and  the  price 
of  oil,  gas  and  other  substances  covered  hereby.  To  the  extent  any  such  laws,  rules,  regulations  or  orders  are  less  restrictive 
than  the  terms  of  this  Lease,  this  Lease  shall  control.  When  drilling,  reworking,  production  or  other  operations  are  prevented 
or  delayed  by  such  laws,  rules,  regulations  or  orders,  or  by  inability  to  obtain  necessary  permits,  equipment,  services, 
material,  water,  electricity,  fuel,  access  or  easements,  or  by  fire,  flood,  adverse  weather  conditions,  war,  sabotage,  rebellion, 
insurrection,  riot,  strike  or  labor  disputes,  or  by  inability  to  obtain  a  satisfactory  market  for  production  or  failure  of  purchasers 
or  carriers  to  take  or  transport  such  production,  or  by  any  other  cause  not  reasonably  within  Lessee's  control,  this  Lease  shall 
not  terminate  because  of  such  prevention  or  delay,  and  at  Lessee's  option,  the  period  of  such  prevention  or  delay  shall  be 
added  to  the  term  hereof.  Lessee  shall  not  be  liable  for  breach  of  any  express  or  implied  covenants  of  this  Lease  when 
drilling,  production  or  other  operations  are  so  prevented,  delayed  or  interrupted.  In  order  for  Lessee  to  claim  the  benefit  of 
this  paragraph,  Lessee  must  use  reasonable  efforts  to  notify  Lessor,  or  the  current  NA/HOA  leadership  of  the  force  majeure 
condition,  setting  forth  in  reasonable  detail  the  facts  associated  with  Lessee's  claim.  Lessee  agrees  to  make  every  reasonable 
attempt  to  cure  any  force  majeure  event. 

13.  Indemnity.  Lessee  hereby  releases  and  discharges  Lessor  and  the  owner  of  the  surface  estate,  along  with 
their  officers,  employees,  partners,  agents,  contractors,  subcontractors,  guests  and  invitees,  and  their  respective  heirs, 
successors  and  assigns  (collectively  the  "Lessor  Parties"),  of  and  from  all  and  any  actions  and  causes  of  action  of  every 
nature,  or  other  harm,  including  environmental  harm,  for  which  recovery  of  damages  is  sought,  including,  but  not 
limited  to,  all  losses  and  expenses  which  are  caused  by  the  activities  of  Lessee,  its  officers,  employees  and  agents 
arising  out  of,  incidental  to  or  resulting  from,  the  operations  of  or  for  Lessee  on  or  under  the  leased  premises  or  at  the 
drill  site  or  operations  site  or  that  may  arise  out  of  or  be  occasioned  by  Lessee's  breach  of  any  of  the  terms  or 
provisions  of  this  Lease,  or  by  any  other  negligent  or  strictly  liable  act  or  omission  of  Lessee.  Further,  Lessee  hereby 
agrees  to  be  liable  for,  exonerate,  indemnify,  defend  and  hold  harmless  the  Lessor  Parties  against  any  and  all  claims, 
liabilities,  losses,  damages,  actions,  property  damage,  personal  injury  (including  death),  costs  and  expenses,  or  other 
harm  for  which  recovery  of  damages  is  sought,  under  any  theory  including  tort,  contract,  statute  or  strict  liability* 
including  attorney  fees  and  other  legal  expenses,  including  those  related  to  environmental  hazards  on  or  under  the 


leased  premises  or  at  the  drill  site  or  operations  site  or  in  any  way  related  to  Lessee's  failure  to  comply  with  any  and 
aU  environmental  laws;  those  arising  from  or  in  any  way  related  to  Lessee's  operations  or  any  other  of  Lessee's 
activities  in,  on  or  under  the  leased  premises  or  at  the  drill  site  or  operations  site;  those  arising  from  Lessee's  use  of 
the  surface  or  subsurface  of  the  leased  premises;  and  those  that  may  arise  out  of  or  be  occasioned  by  Lessee's  breach 
of  any  of  the  terms  or  provisions  of  this  Lease  or  any  other  act  or  omission  of  Lessee,  its  directors,  officers,  employees, 
partners,  agents,  contractors,  subcontractors,  guests,  invitees  and  their  respective  successors  and  assigns.  Each 
assignee  of  this  Lease,  or  of  an  interest  herein,  agrees  to  be  liable  for,  exonerate,  indemnify,  defend  and  hold  harmless 
the  Lessor  Parties  in  the  same  manner  provided  above  in  connection  with  the  activities  of  Lessee,  its  officers, 
employees  and  agents  as  described  above,  EXCEPT  AS  OTHERWISE  EXPRESSLY  LIMITED  HEREIN,  ALL  OF 
THE  INDEMNITY  OBLIGATIONS  AND/OR  LIABILITIES  ASSUMED  UNDER  THE  TERMS  OF  THIS  LEASE 
SHALL  BE  WITHOUT  LIMITS  AND  WITHOUT  REGARD  TO  THE  CAUSE  OR  CAUSES  THEREOF 
(EXCLUDING  PRE-EXISTING  CONDITIONS),  STRICT  LIABILITY  OR  THE  NEGLIGENCE  OF  ANY  PARTY 
OR  PARTIES  (INCLUDING  THE  NEGLIGENCE  OF  THE  INDEMNIFIED  PARTY),  WHETHER  SUCH 
NEGLIGENCE  BE  SOLE,  JOINT,  CONCURRENT,  ACTIVE  OR  PASSIVE. 

14.  Notices.  All  notices  required  or  contemplated  by  this  Lease  shall  be  directed  to  the  party  being  notified  at  the 
address  identified  above,  unless  notice  of  another  address  has  been  provided  in  writing.  All  such  notices  shall  be  made  by 
registered  or  certified  mail,  return  receipt  requested,  unless  another  means  of  delivery  is  expressly  stated. 

15-  Np  Warranty  of  Title.  Lessor  makes  no  warranty  of  any  kind  with  respect  to  title  to  the  surface  or  mineral  estate  in 
the  leased  premises  or  any  portion  of  or  interest  therein.  All  warranties  that  might  arise  by  common  law  or  by  statute 
including  but  not  limited  to  Section  5.023  of  the  Texas  Property  Code  (or  its  successor)  are  excluded.  By  acceptance  of  this' 
Lease,  Lessee  acknowledges  that  it  has  been  given  full  opportunity  to  investigate  and  has  conducted  sufficient  investigation 
to  satisfy  itself  as  to  the  title  to  die  leased  premises.  Lessee  assumes  all  risk  of  title  failures. 

16     Tod  Leasing  Permitted.  There  shall  be  no  prohibition  or  limitation  on  top  leasing. 

1 7.  Venue  and  Legal  Fees.  Venue  for  any  dispute  arising  under  this  Lease  shall  he  in  Tarrant  County,  Texas  where  all 
obligations  under  this  Lease  are  performable. 

18.  Qff-Site  Drillsite.  As  a  result  of  land  development  in  the  vicinity  of  the  lease  premises,  governmental  rules  or 
ordmances  regarding  well  sites,  and/or  surfece  restrictions  as  may  be  set  form  in  this  lease  and/or  other  leases  in  the  vicinity 
surface  locations  for  well  sites  in  the  vicinity  may  be  limited  and  Lessee  may  encounter  difficulty  securing  surfece  location(s) 
for  drilling,  reworking  or  other  operations.  Therefore,  since  drilling,  reworking  or  other  operations  are  either  restricted  or  not 
allowed  on  the  lease  premises  or  other  leases  in  the  vicinity,  it  is  agreed  that  any  such  operations  conducted  at  a  surfece 
location  off  of  the  lease  premises  or  off  of  lands  with  which  the  lease  premises  are  pooled  in  accordance  with  this  lease 
provided  that  such  operations  are  associated  with  a  directional  well  for  the  purpose  of  drilling,  reworking,  producing  or  other 
operations  under  the  lease  premises  or  lands  pooled  therewith,  shall  for  purposes  of  this  lease  be  deemed  operations 
conducted  on  the  lease  premises.  Nothing  contained  in  this  paragraph  is  intended  to  modify  any  surfece  restrictions  or 
pooling  provisions  or  restrictions  contained  in  this  lease,  except  as  expressly  stated. 

19.  Option  to  Extend.  Lessee  is  hereby  given  the  option,  to  be  exercised  prior  to  the  date  on  which  this  lease  or  any 
portion  thereof  would  expire  m  accordance  with  its  terms  and  provisions  of  extending  mis  lease  for  a  period  of  two  (2)  years 
as  to  all  or  any  portion  of  the  acreage  then  held  hereunder  which  would  expire  unless  so  extended.  The  only  action  required 
by  Lessee  to  exercise  such  option  being  the  payment  to  Lessor  (or  for  Lessor's  credit  at  the  depository  bank  named  herein) 
and/or  such  parties  entitled  under  any  change  of  ownership  according  to  Lessee's  records,  an  additional  consideration  of  the 
sum  of  Twenty  Thousand  Dollars  ($20,000.00)  per  net  mineral  acre  owned  by  the  party  entitled  to  such  payment  at  such  time 
or  extension,  in  the  acreage  so  extended.  If  this  lease  is  extended  as  to  only  a  portion  of  the  acreage  then  covered  hereby 
Lessee  shall  designate  such  portion  by  a  recordable  instrument. 

20.  Volunteer  Orpani^inn  Liability  Protection 

(a)  Release  and  Discharge  In  consideration  of  their  time  and  efforts,  Lessor  does  hereby  release  and  forever  discharge  the 
(Kerton  Woods  Homeowners  Association  (OWHA)  and  any  of  its  officers,  directors,  an  Gas  Lease  Committee  Members  all 
of  whom  are  unpaid  volunteers  (collectively,  the  "OWHA  Volunteers")  of  and  from  any  and  all  claims,  demands,  obligations 
losses,  causes  of  action,  expenses,  attorney's  fees,  and  liabilities  of  any  nature  whatsoever,  whether  based  on  contract,  tort 
statutory oi -other  legal  or  equitable  theory  of  recovery,  whether  known  or  unknown,  past  or  present,  or  future  which  Lessor 
has,  has  had,  or  claims  to  have  against  the  OWHA  Volunteers  which  relate  to,  arise  from,  or  are  in  any  manner  connected  to  (i) 
the  terms  of  the  Lease  Agreement  and  the  amount  of  bonus  and  royalty  paid  hereunder  (the  "Lease  Terms")  (ii)  the 
negotiation  of  the  Lease  Terms,  (iii)  the  inclusion  and/or  omission  of  any  terms  within  the  Lease  Terms  or  (v)  any  and  all 
representations  made  prior,  during,  and  subsequent  to  Lessor's  execution  of  this  Lease  Agreement. 

(b)  FreeWill.  Be  it  known  mat  Lessor  agrees  to  sign  this  Lease  Agreement  on  its  own  free  will.  Lessor  was  in  no  way 
coerced  to  sign  said  Lease  by  the  OWHA  or  any  of  the  OWHA  Volunteers.  All  proceeds  derived  from  the  Lease  fully  remain 
the  property  of  the  Lessor. 

(c)  Lessor  Acknowledgement  By  signing  this  Lease  Agreement,  Lessor  acknowledges  and  stipulates  that  Lessor  was  not 
obligated  to  sign  this  Lease  Agreement  and  that  Lessor  had  the  right  to  negotiate  its  own  terms  with  any  company  prior  to 
signing  this  Lease  Agreement.  Additionally,  Lessor  acknowledges  that  it  is  the  Lessor's  obligation  to  investigate  the  Lease 
Agreement  and  all  terms  thereof,  and  to  take  such  action  as  necessary  to  make  an  informed  decision  prior  to  signing  this  Lease 
Agreement,  and  that  the  decision  made  by  Lessor  in  signing  this  Lease  Agreement  is  made  after  fully  researching  the  matter 
independent  of  any  other  information  proved  by  OWHA  or  the  OWHA  Volunteers.  It  is  ultimately  the  responsibility  of  Lessor 
to  (a)  determine  if  Lessor  wants  to  negotiate  with  the  Lessee,  (b)  fully  investigate  the  issues  and  facts  related  to  signing  a  Lease 
Agreement,  and  (c)  determine  what  terms  are  acceptable  to  Lessor  to  be  included  in  this  Lease  Agreement 

Subordination  Agreement  Fees  /  Division  Order*  Notwithstanding  anything  contained  herein  to  the  contrary 
neither  Lessee  nor  Lessee's  assigns  shall  ever  require  a  subordination,  partial  release  of  hen,  release  of  hen,  consent  or  other* 
documentation  from  any  lender  of  Lessor  that  has  a  lien  on  said  land  as  a  condition  to  Lessor  receiving  any  subsequent  royalty 


payment,  unless  the  wellbore  penetrates  the  leased  premises  or  is  located  within  330  feet  from  the  leases  premises  However 
Utfnr  wdl  cooperate  with  any  reasonable  effort  of  Lessee,  at  Lessee's  sole  expense,  to  obtain  same  from  Lessor's  lender  on 
benatf  ot  Lessor.  In  the  event  Lessee  is  unable  to  obtain  a  subordination  agreement  from  any  hen  holder  of  a  hen  affecting  the 
eased  premises,  Lessee  is  hereby  permitted  to  discharge  any  tax,  mortgage,  or  other  lien  or  interest  and  other  charges  on  the 
leased  premises,  and  in  the  even  Lessee  does  so,  Lessee  will  have  the  option  of  applying  the  royalties  accruing  to  Lessor 
toward  payment  of  same  and  Lessee  shall  be  subrogated  to  the  rights  of  the  holder  thereof.  In  the  even  Lessee  must  exercise 
its  discharging  rights  herein  granted,  Lessee  shall  provide  prior  written  notice  to  Lessor. 

22.  MiscellaneQMS.  This  Lease  is  entered  into  in  the  State  of  Texas  and  shall  be  construed,  interpreted  and  enforced  in 
accorfance  with  the  laws  of  the  State  of  Texas  without  reference  to  choice-of-law  rules.  Should  any  of  the  provisions  herein 
DC i  determined  to  be  invalid  by  a  court  of  competent  jurisdiction,  it  is  agreed  that  this  shall  not  affect  the  enforceability  of  any 
otoprnvision  herein  and  that  the  parties  shall  attempt  in  good  fifth  to  renegotiate  that  provision  so  determined  to  be  invalid 
to  effectuate  the  purpose  of  and  to  conform  to  the  law  regarding  such  provision.  The  section  titles  appearing  in  this  Lease  are 
tor  convenience  only  and  shall  not  by  themselves  determine  the  construction  of  this  Lease.  This  Lease  may  be  executed  in 
one  or  more  counterparts,  each  of  which  shall  be  deemed  an  original,  but  all  of  which  shall  constitute  one  and  the  same 
mstrument.  Singular  and  plural  terms,  as  well  as  terms  stated  in  the  masculine,  feminine  or  neuter  gender,  shall  be  read  to 
include  the  others)  as  the  context  requires  to  effectuate  the  full  purposes  of  this  Lease. 

„  .    ™  ^TTfE^S  WHEREOF,  this  Lease  is  executed  to  be  effective  as  of  the  date  first  written  above,  but  upon 

execution  shall  be  binding  on  each  signatory  and  the  signatory's  heirs,  devisees,  executors,  administrators,  successors  and 
assigns,  whether  or  not  this  Lease  has  been  executed  by  all  parties  hereinabove  named  as  Lessor 


LESSOR/S: 


STATE  OF  TEXAS 
COUNTY  OF  TARRANT 


L0q. 

This  instrument  was  acfaiowledged  before  me  on  the  day  of  2008,  bySSii  K  Cartway, 

Individually,  and  as  Independent  Executrix  of  the  Estate  of  Robert  H  Carraway,  Jr. 


Exhibit  *AW 


Block  1,  LotA28 

Overton  Woods  Addition 

City  of  Fort  Worth,  Tarrant  County,  Texas 

0.2133  acres,  more  or  less